On January 13, Shanghai-listed materials maker Rongbai Technology announced a headline-grabbing framework agreement with battery giant CATL, saying it would supply about 3.05 million tonnes of lithium iron phosphate (LFP) cathode material to CATL between 2026 and 2031, with a total value “exceeding 1200 billion yuan.” The wording read like a firm, market-shaping contract and briefly sent the company's shares higher, but the text of the agreement contained no monetary clause and the numbers turned out to be an internal estimate rather than a legally binding commitment.
Regulators and the counterparty moved quickly. The Shanghai Stock Exchange immediately queried Rongbai about where the 1200‑billion‑yuan figure came from and whether the company’s current capacity could plausibly meet such volumes. CATL waited several days before saying the document was a non‑binding memorandum of intent that had not passed its internal approvals, and the China Securities Regulatory Commission announced a formal investigation on January 18 into possible misleading disclosure.
Close reading of Rongbai’s filing shows why the alarm bells rang. The company later acknowledged that the headline sum was an “estimate” derived from the projected 3.05 million tonnes; actual revenues would depend on raw‑material prices, delivery schedules and other variables. More worrying for investors, Rongbai’s existing LFP output is tiny by comparison: a 60,000‑tonne line acquired for 2025 leaves an annual shortfall of roughly an order of magnitude if it were to meet the implied yearly supply of more than 500,000 tonnes. Industry norms suggest adding over 400,000 tonnes of capacity would cost at least 8 billion yuan — but the announcement made no financing or execution plan.
The episode highlights internal governance failures. Rongbai admitted the disclosure was signed only by its company secretary and had not been routed to the chairman or subjected to internal major‑contract review procedures. That failure to follow disclosure protocols transformed an optional, non‑binding commercial conversation into a public market event with regulatory consequences. The immediate result was regulatory scrutiny and a formal CSRC probe for allegedly issuing misleading statements.
Why would a materials specialist take such a risk? Rongbai is a traditional maker of high‑nickel ternary cathode materials that has been hurt by the industry’s shift toward LFP in some market segments. Its 2025 nine‑month results showed revenue and profit pressure, and management has a strong incentive to attract capital or recast the narrative about a stalled transition. Associating itself with CATL — the world's largest battery maker — via a publicised “strategic cooperation” can lift short‑term sentiment, improve liquidity prospects and open pathways for refinancing.
CATL’s role is more ambiguous and consequential. The battery maker’s delayed and evasive response — essentially telling reporters to “ask Rongbai” — neither confirmed nor robustly denied the substance of the claimed deal. That stance allowed market speculation to fester and exposed a responsibility common to industry leaders: when your name is used as a credibility anchor, silence can be as enabling as false endorsement. CATL, which has signed multiple non‑binding framework agreements in recent years, treats such documents as flexible supply‑chain tools; but repeatedly permitting ambiguous publicity risks diluting the company’s trust capital and contributing to speculative episodes in upstream suppliers.
The broader significance reaches beyond two firms. For investors and international buyers tracking China’s battery supply chain, the case is a reminder that “framework” or “strategic” agreements in the sector often lack the contractual rigor of purchase orders and can be used principally as signalling devices. For regulators it underlines the need to enforce disclosure rules robustly to protect investors in a market where a small company can materially affect perceptions of a much larger ecosystem by publicising aspirational numbers.
The likely fallout is straightforward: the CSRC investigation could result in fines, required corrections to disclosure practices, and heightened oversight for both Rongbai and peers. More important, the episode may cool the market’s appetite for headline‑style supply announcements and push counterparties, especially dominant players, to tighten internal controls to prevent reputational contagion. In an industry where capacity, price and demand are shifting rapidly, clarity and disciplined disclosure matter as much as technical capability.